Nigerian Bonds Yield Falls Amidst Multiple Expectations
The Nigerian bonds traded on a quiet note in the secondary market, albeit with a bullish undertone, as the average yield pared by a basis point to close at 20.2% on Monday. Most transactions were concentrated in the Feb 2031 and Jan 2035 bond papers.
The market is currently filled with multiple expectations. One of these is inflation rate direction and expectation over what the monetary policy authority will do to the policy rate in February.
Some analysts expect the Central Bank of Nigeria (CBN) to increase the interest rate benchmark at the upcoming meeting to match the strength of the consumer price index.
Interest rate hikes will reduce negative yields on portfolio assets, analysts said, noting the uncertainties relating to Nigeria’s plan to rebase the consumer price index and gross domestic product.
In the secondary market for local bonds, traders also spotted market interests on the 2026 FGN Bonds and 2038 papers, as most players were largely on the sidelines due to the strained system liquidity and anticipation of the Treasury bills auction, CardinalStone Securities Limited said in a note.
In its note, Cordros Capital Limited told investors that across the benchmark curve, the average yield declined at the short (-3bps) end due to buying interest in the JAN-2026 (-16bps) bond but remained unchanged at the mid and long segments.
The market witnessed some selloffs, prompted by liquidity shortfalls in the banking system. The condition fueled asset sell down at the start of trading session.
Market participants offloaded their holdings moderately at the short end of the yield curve. Notably, yields on the auction bond papers, Feb-31 and Jan-35, were repriced upward, with both closing at 22.45%.
Consequently, the average yield edged up by 1bp to settle at 22.02%, and analysts expect the cautious trading session to persist. #Nigerian Bonds Yield Falls Amidst Multiple Expectations US Dollar Rises Ahead Macro data, Inauguration
